Failed States Index

The troubling ambiguity of FP's rankings. Plus: Finland comes in last for once.

While the Failed States Index (July/August 2012) is good fun as a debate stimulator or parlor game, I hope no one — investors and tourists in particular — takes it too seriously. As someone who works full time on Africa — and African countries fill a lot of the top slots — I have three fundamental doubts about its validity.

First, it’s not what you see but the way that you see it. Some factors used in the index — rates of HIV infection, for example — are clearly measurable and are either totally positive or negative. But others are ambiguous or too subjective to mean anything. Take “vengeance-seeking group grievance.” Surely one man’s vengeance is another man’s justice. Who is to judge? And most factors have positive as well as negative impacts. Mounting demographic pressures are bad, the index reckons. But what of the demographic dividend? Africa’s population will double to 2 billion people in the next 40 years in what amounts to a great opportunity as well as a danger. And what of the Arab Spring, which we all cheered at the time? Of course governance in Egypt, Libya, and Tunisia has grown weaker. Hooray! Yet these countries all shoot up the chart.

Second, not even the worst countries in the ranking can be written off as completely failed states. Somalia tops the list, but Somaliland — which constitutes about a quarter of the country’s land mass — has separated itself from the rest of the country and is stable and relatively well run. Add that to nearby Puntland, which is also secure but not so well run, and you have half of Somalia enjoying a measure of peace and stability. The index, moreover, assumes that Somali piracy is entirely negative even though ransom money has had a positive impact on the Somali economy.

Third, the index misses one vital factor: chronic capital flight from poor countries — especially of the illicit variety — conducted largely by transnational companies avoiding taxes through commodity mispricing. Nearly a trillion dollars was looted from Africa through these methods between 1970 and 2008, according to the Washington-based think tank Global Financial Integrity, and that figure has since risen sharply. Poor countries in other parts of the world suffer from this same problem. Will the index assess the cost of these massive financial outflows on human well-being and governance? Now that would be interesting.

In recent years, Finland has grown accustomed to coming out on top in various international rankings. Be it student performance (Program for International Student Assessment, 2003, 2006, 2009), happiness (Gallup World Poll, 2010), competitiveness (World Economic Forum, 2000-2011), or simply being the best country in the world (Newsweek, 2010), we have been at or near the top. In the Failed States Index, however, we are more than happy to find ourselves at the very bottom — as the world’s least failed state.

Over the past 100 years, we have gone from being a poor country to a relatively successful one. An international mindset, along with our determination to open up to international trade and break the barriers of the European Union’s internal market, has enabled our economy to grow. We can easily say that exports, which make up 40 percent of our GDP, are the oxygen we breathe.

Finland’s small agrarian population and location at the northern fringes of Europe presented the nation with early challenges. The country has very little in the way of natural resources, but we have continuously invested in what we consider to be our greatest resource: our people. We believe that everyone in society must be given the opportunity to develop — in our case through equal and universal access to high-quality, low-cost education. Our relative scarcity of resources has also encouraged us to innovate.

Our political stability, meanwhile, is based on our non-hierarchical social heritage and pragmatic approach to building political consensus. Coalition governments made up of diverse political parties have become the norm in the country, yet these parties manage to collaborate in the best interest of the nation.

Finland’s current six-party governing coalition — whose members range from the Left Alliance (former communists) to the mainstream center-right National Coalition — has decided to cut public spending and increase revenues for a net gain of approximately 4.7 billion euros by 2015, which amounts to 10 percent of our annual budget. Sound public finances and a commitment to honoring the limits we agreed upon with our EU partners have helped Finland maintain one of only four remaining sovereign AAA credit ratings in the eurozone.

Where your Failed States coverage (“10 Reasons Countries Fall Apart,” July/August 2012) speaks of failure “by design,” we believe in “success by design” — by investing in all of our citizens and giving them access to knowledge and freedom to act. With that blueprint, Finland has built an open, reliable nation that works for everyone.

As we often point out, the Failed States Index takes a broad brush to a complex problem. But sometimes a broad brush can be useful — and valid. The imperatives of democracy, development, and security are frequently in tension, complicating any effort to establish a universal index. However, the index makes the assumption that these three factors are all important in the long term for sustainable political stability. For country-specific assessments, we do tailor the framework and weight the variables for the particular context and priorities of the audience. But for the index, we weight all indicators equally, triangulating data from the content analysis of millions of electronic documents with pre-existing data sets and qualitative review to minimize subjective bias as much as possible.

With respect to Richard Dowden’s second point, our methodology does not define any state as completely failed. We look at state failure as a continuum of risk, as measured by pressures on the state. Virtually every country in the world is on this list.

We wholeheartedly agree with Dowden’s last point about the negative roles played by external and nonstate actors. This index is not a measure of state performance. It is a measure of pressures on the state, which the state must then manage. As for the specific measure (illicit capital flight) that he would like us to include in the index, we appreciate his suggestion and will consider how it might be used in future indices. In the meantime, please note that we have included other measures of corruption, such as Transparency International’s Corruption Perceptions Index.